12/1/2012

Those who enjoy reading well-written, approachable papers about economic issues may enjoy this paper by John Cochrane (.pdf). Those who are not going to click the link should read this passage about ObamaCare (the Affordable Care Act, or ACA) and the prospects for solving the health care problem by regulating the daylights out of it:

The ACA and the health‐policy industry are betting that new regulation, price controls, effectiveness panels, “accountable care” organizations, and so on will force efficiency from the top down. And the plan is to do this while maintaining the current regulatory structure and its protection for incumbent businesses and employees.

Well, let’s look at the historical record of this approach, the great examples in which industries, especially ones combining mass‐market personal service and technology, have been led to dramatic cost reductions, painful reorganizations towards efficiency, improvements in quality, and quick dissemination of technical innovation, by regulatory pressure.

I.e., let’s have a moment of silence.

No, we did not get cheap and amazing cell phones by government ramping up the pressure on the 1960s AT&T. Southwest Airlines did not come about from effectiveness panels or an advisory board telling United and American (or TWA and Pan AM) how to reorganize operations. The mass of auto regulation did nothing to lower costs or induce efficient production by the big three.

When has this ever worked? The post office? Amtrak? The department of motor vehicles? Road construction? Military procurement? The TSA? Regulated utilities? European state‐run industries? The last 20 or so medical “cost control” ideas? The best example and worst performer of all…wait for it… public schools?

It simply has not happened. Government‐imposed efficiency is, to put it charitably, a hope without historical precedent.

Also, government control of health care is antithetical to capitalism, and thus, to freedom. Because there is no such thing as freedom without capitalism.

You do understand that, right?

We really lost something fundamental when this country re-elected Barack Obama. We lost the chance to save 1/5 of our economy from oppressive government regulation that is doomed to failure.

I plan to have much more to say about the failures of ObamaCare. I have a cache of links sent by a reader that should furnish the basis for a good series of posts. For now, read the Cochrane paper.

Pat, I’m with you dude. But what can I say. The people who voted for the (expletive deleted) that regulated into this mess just outvoted me again. Now they think the same (expletive deleted) are going to regulate them out of this mess.

Those who support the “government can do it better” narrative somehow always believe that Medicare, Indian affairs, the veterans health care, welfare, social security, education, and other government programs are either doing well or need more money to do well and it’s only the selfish “rich” that are preventing them from doing well by not giving them enough money.

The hubris I hear from them is that the average person doesn’t know well enough what’s good for them and the government has to step in to save us from our stupid selves. These are words I’ve heard from my oldest step-son who after 13 years of college has yet to get a 4 year degree. I don’t think facts matter to them, because it is a belief system. He thinks AMTRAK is wonderful. They usually don’t have a family and make a small income that they don’t see the burden of more taxes and excessive government regulation.

Also, government control of health care is antithetical to capitalism, and thus, to freedom. Because there is no such thing as freedom without capitalism.

You do understand that, right?

Free markets are the only way to get people to cooperate without coercion. This apparently peeves certain people to no end. The coercive type of people who can’t stand the fact that someone somewhere is free of their coercion.

It’s ironic, isn’t it, that the same people who insist on such things as individual mandates accuse their opponents of being the American incarnation of the Taliban.

It seems to me that if there is a more efficient way to do something, resulting in more free time or more income or some of both, people don’t need the govt to tell them to do it, unless they are somehow guaranteed “enough” without working any harder.

But, it seems to me that what often happens, even in the private sector, is that somehow the job of making things “better” ends up in the hands of professional administrators who have ideas of what they think would make things better on the basis of what they think is happening and what they think the problems are; when in reality what is happening and what needs to be dealt with are very different, and the people who have been doing and have some ideas of the problems don’t get to be part of the process.

At least that has been my experience in the health care field. I still think that maybe somewhere out there is a consultant who actually can make something better, rather than simply giving people the impression that something is being done.

It’s like Obama setting up a panel or calling a meeting and pretending that is actually acting on a problem.

I actually even had this problem trying to learn some computer technology. The consultants were pretty persistant on telling me what they thought I needed to learn instead of listening to what it was I wanted to accomplish.

Maybe I’m just a stubborn SOB who won’t listen myself so can’t be helped, but even if I am, I still don’t think all of the problem is me.

Speaking of Obama, it seems he continues to be consistent in foreign policy- silent when pro-democratic forces in a country would like at least a little moral support, Egyptian protestors say hello to Iranian protestors.

But then, such “moral” support would be moral, and we can’t have that.

I love limousine liberals. As for the one who occupies the White House, my only regret is that he keeps returning there after all his time out frolicking and partying.

whitehousedossier.com, December 2, 2012:

President Obama today is golfing at Andrews Air Force Base with Bill Clinton, U.S. Trade Representative Ron Kirk and Virginia gubernatorial candidate Terry McAuliffe, according to the White House press office.

This is the 107th time Obama has been golfing as president and the 15th time this year. After avoiding the fairways during a reelection campaign that portrayed him as a warrior for the middle class, Obama has returned to golf with a vengeance, heading out to play three times since being reelected last month.

This is a point that illustrates the difference in health insurance vs other kinds. We do not feel any obligation (in general) to see that people can own and drive a car if possible; whereas there is something of an ethical obligation to see that people can have their basic needs of life provided as possible.

But the defining of those obligations as responsibilities vs rights and how they are put into practice is not clear.

Even if liberals agreed with the linked article and this post, my guess is they don’t care about efficiency. They care about what they view as fairness, and the only way liberals believe life can be fair is if government bureaucrats are in charge of everything. It’s a foolish view but consistent.

liberals believe life can be fair is if government bureaucrats are in charge of everything. It’s a foolish view but consistent.
Comment by DRJ (a83b8b) — 12/2/2012 @ 4:47 pm

I think it really is fundamentally an issue of a Judeo-Christian world view or not. Are individual people basically flawed and need to hold one another in check whether working “for profit” or not; or is it circumstances that people are victims of that mess things up, and if you put smart people in charge of working out the circumstances life will be good.

Disclosure: I am against Obamacare, I believe it is bad policy and worse legislation, and nothing but bad news will come of it.

That being said, the healthcare system in this country is a gigantic mess, and it would be well if we could figure out something practical and reasonable to do about it. Of course, Obamacare is not that thing, but now that this wicked man has been re-elected, barring open revolt which is highly unlikely, I see only two possibilities for the near future:
a) repeal now being off the table, we just suffer through it and watch in stifled horror as our country is destroyed a little bit more every day; or
b) the Obamacare system is such an unworkable catastrophe that it collapses the system at large (perhaps deliberately so, as has been argued) and then we wait for an even worse structure to be erected by the lunatics in charge.

But with a huge thing as dire and all-encompassing and inescapable as health care, when we are searching for reforms that make actual sense, it will not do to cling simply to a small handful of conceptual arrangements like “free market efficiency”, or capitalism, or even “freedom” in the abstract, when the particulars of the case are too large to be bounded by them, and when there are a host of other conceptual arrangements which deserve just consideration as well.

Which is not to say that free market efficiency should be dismissed; it is after all a proven tool, a marvelous diagnostic and predictive device, and the best known available pole star for allocation of resources. But it’s a tool, all the same, and not the goal itself — one uses a tool to make the thing one desires, not to simply revel in using a tool. And conceptually, freedom isn’t the only thing we should be thinking about, and besides, we mustn’t, as they say, assume a can opener: proper working free markets presuppose a great deal of foundations, which through things like bad immigration and education policies we have been recklessly frittering away. You can have all the free market efficiency in the world, but if your society is composed of 50% illegal Third World paupers, then you can either accept the carnage which true efficiency would bring, or think of something else.

All of which is a long-winded way of saying that there are other axes besides the free market along which something as complex as a reasonable health care system must be plotted.

“The best example and worst performer of all…wait for it… public schools?”

The public schools are not a good example of the axiomatic inevitable failure of a large publicly-administered system. The public schools in general were quite successful for a very long time. Their recent (and increasingly) spectacular failure is not due to the unchanging proposition that “gubmint jes’ cain’t do anything right”, it is due to demographic changes in the nature of who exactly is attending these schools, aggravated by the ideological takeover of the schools by leftist nutjobs who refuse reality and who can’t tell a horseshoe from a hand grenade.

In the realm of public policy there are a lot of large-scale projects which can be successfully achieved if you have a sane, realistic leadership class and a fairly homogeneous, high-IQ, and morally astute population. The United States, even within my youth, still had both these things; but no longer. And unless and until our leadership and our people are willing to admit out loud what the actual problem is, we will keep flailing about in vain, grasping at solutions which are not only wrong but which are guaranteed to intensify the failure.

“The ACA and the health‐policy industry are betting that new regulation, price controls, effectiveness panels, “accountable care” organizations, and so on will force efficiency from the top down”

The real goal of the ACA is not to create price efficiency or any other of that hooey. The real goal is to plunder wealth from white America and transfer it to Obama’s (and the Dems’) natural power base: blacks, browns, foreigners, and the permanently disaffected fringe classes like ignorant young people and the gay community.

It has the natural side of effect of inevitably diminishing the power base of the opposition: as health care dollars are rationed, more older, whiter voters will die off and the money saved will be used to subsidize younger, darker voters. Don’t think they haven’t gamed this out.

The public schools are not a good example of the axiomatic inevitable failure of a large publicly-administered system. The public schools in general were quite successful for a very long time.

Yes. About 60 to 100 years. Approximately from 1868 to 1929 or maybe 1960 depending on where.

Eventually the impetus from the people who st them up ran out, and they also mutated.

The thing about government is that it is very hard for it to correct its mistakes. Sometimes that is true with businesses, also, but then they usually have competition, so another business can take its place. If you have a monopoly, indeed you have problems. It gets bad, and doesn’t get better. Case in point: The Los Angeles Times.

Their recent (and increasingly) spectacular failure

Not so recent. Rudolph Flesch wrote “Why Johnny Can’t Read” back in 1955, I think.

Schools have probably been just about impossible to improve since the rise of teacher’s unions (which always want all teachers to be paid the same, or paid differently only on the basis of had criteria, like subject matter or number of useless degrees accumulated..

is not due to the unchanging proposition that “gubmint jes’ cain’t do anything right”, it is due to demographic changes in the nature of who exactly is attending these schools,

No, schools used to do a fairly good job of educated children of uneducated parents. And they got worse also in the black neighborhoods compared with what they were in the 1930s or even the 1950s. Colin Powell (born 1937) went to public schools in the Bronx.

So they say: family breakdown! But even this should not be an obstacle.

Although the inability to expel, or just get certain students – even if it is half of them – out of a classroom, is.

aggravated by the ideological takeover of the schools by leftist nutjobs who refuse reality

They don’t want any racial disparity in disciplinary problems. But this does not reflect current reality, and the more you don’t reflect it, the more the racial disparity grows.

You have to wonder which one, Obama or Clinton, fudges his golf score more?
I mean, numbers are just relative constructs right?
Comment by askeptic (2bb434) — 12/2/2012 @ 5:09 pm

— Overheard on the course:
“You didn’t two-putt that!”
“Gee, and I thought your biggest handicap was Biden.”
“Don’t tell my wife that I’m smoking.”
“You’re hooking all of your shots way left.”
“Yeah, I can’t stand to be at home with mine, either.”
“What do you mean, I’m ‘probably used to having a different ball-washer at every hole’?”
“Watch me crush this drive like it’s Hannity’s nutsack!”
“There’s more bogus numbers on that scorecard than a Chicago vote tally!”
“I’m not trying to mess up your shot; just reminding you that I got bin Laden, that’s all.”
“What do you mean, I’m ‘barred’ from attending Malia’s 18th birthday party?”
“Give me a Mulligan or else I’ll change your wife’s travel itinerary to match yours!.”
“I feel the pain of your triple-bogey.”
“No, I will not hand you your 5-iron! Should I tell you to go screw your 1st cousin?”
“Already did!”

“The thing about government is that it is very hard for it to correct its mistakes.”

It is a lot less hard if the people are not torn apart by racial, ethnic and ideological factionalism (otherwise known as “diversity”). If the people have common mores and a common understanding of civics (which generally are derived by being from a common or closely related ethne), then the civic fabric is a lot easier to hold together.

“Sometimes that is true with businesses, also, but then they usually have competition, so another business can take its place.”

Not a good analogy. First of all, all of life is not a business model. Second of all, govt is capable of treading water or running in place for reasonable periods, provided no inter-ethnic etc etc. The competition in public schools comes from downward pressure, not upwards. Once standards of decency are tossed aside (see under: diversity) then you get into your lowest common denominator syndrom. Besides, the big problem with public schools is that they DO have competition: any parents with the means to send their kids to religious school or private school will do so. Who is left? The children of parents who couldn’t do that, or didn’t care. It’s a different set of behavioral models.

“Not so recent. Rudolph Flesch wrote “Why Johnny Can’t Read” back in 1955, I think.”

Don’t be silly. There’s a world of difference between what ‘Johnny’ couldn’t read back in 1955, and what Juan and Deshawndre can’t read today. My maternal uncles were inner-city white-ethnic products of a ‘rough’ working-class public school circa 1955. They all went on to become successful contractors, plumbers, skilled tradesmen. They don’t read Tennyson but they can damn sure read a contract. They got into the occasional knife fight in high school, but I remember one uncle complaining that they were trying to make him read “Ivanhoe” in school, but he wanted to read Mickey Spillane instead. You think Deshawndre even has the faintest clue who even a literary thug like Mickey Spillane is?

“Colin Powell (born 1937) went to public schools in the Bronx.”

Remind me not to tell you my opinion of Colin Powell. But more importantly…. okay, one. Keep going.

“they got worse also in the black neighborhoods compared with what they were in the 1930s or even the 1950s”

Yes, but this is not an indictment of large-scale public operations per se, it is a vindication of the predictions that D.P. Moynihan made before the Great Society was implemented. They laughed at him and called him a racist.

Was it Jane Jacobs or Yogi Berra who said, “You can observe a lot just by looking.” ?

“The thing about government is that it is very hard for it to correct its mistakes.”

It is a lot less hard if the people are not torn apart by racial, ethnic and ideological factionalism (otherwise known as “diversity”). If the people have common mores and a common understanding of civics (which generally are derived by being from a common or closely related ethne), then the civic fabric is a lot easier to hold together.

That’s a separate matter. Competence and public trust are two separate things. Government is not built to correct its mistakes. It just goes on.

Neither does it increase its budget when circumstances call for it.

Second of all, govt is capable of treading water or running in place for reasonable periods, provided no inter-ethnic etc etc.

That may be one indication that it is avoiding stress. (and it can’t handle stress because it can’t adjust)

But even with the same people, schools in particular may be on course set to deteriorate with time.

Besides, the big problem with public schools is that they DO have competition: any parents with the means to send their kids to religious school or private school will do so.

In this case they do – and I suppose also you could say the same with police protection even – people vote with their feet.

The problem is, even when they lose market share, nothing changes. (with the voucher system something would have to chaneg, at least if schoools could be clsoed.

You see how hard they fight in California to close even one school? And in new York we had some schools closed and then new schools, scheduled to reopened in the same building, and the teacher;s uniuons went to court and successfully (for the time being) argued it was a ruse to get around a union contract that prohibited firing teachers excepot by seniority.

Sure that could be unfair toi any good teachers in thise schoools, but until you close schoools, nothing can really change..

Who is left? The children of parents who couldn’t do that, or didn’t care. It’s a different set of behavioral models.

The standards are set from the top. Behavioral models only matter when the system itself does not know how to handle students.

I would say if you really don’t know how to to deal with different students, get rid of compulsory education. It doesn’t work and just ruins the schoools for those who want to go there.

Attendance seems to be more or less enforced but nothing else. Sometimes attendance is not enforced but it is still enforced too much and then absences ignored. (It is not really that people who come from certain backgrounds can’t be educated. Even to read? who could beleive that?)

I read this weekend that schools in Washington DC have this situation: First a lot of students in high school are absent. (and anyway, I suppose they are not up to the work as a result of social promotion.)

Then they get a credit makeup during the summer.

But they don’t get taught anything then either! They just get passed!

And those who do well in school? (And there are many more girls than boys)

“Not so recent. Rudolph Flesch wrote “Why Johnny Can’t Read” back in 1955, I think.”

Don’t be silly. There’s a world of difference between what ‘Johnny’ couldn’t read back in 1955, and what Juan and Deshawndre can’t read today. My maternal uncles were inner-city white-ethnic products of a ‘rough’ working-class public school circa 1955. They all went on to become successful contractors, plumbers, skilled tradesmen. They don’t read Tennyson but they can damn sure read a contract. They got into the occasional knife fight in high school, but I remember one uncle complaining that they were trying to make him read “Ivanhoe” in school, but he wanted to read Mickey Spillane instead. You think Deshawndre even has the faintest clue who even a literary thug like Mickey Spillane is?

It got worse or wsenmt down to a whole new level.

Bit still:

It’s like this. You only need one or two or three good teachers, or it could also be a parent.

There is tremendous redundancy in education. Unbelieveable redundancy. (and yet they have parents and educators worried aboiut children missing a few days of school. Total nonsense, the way schools are now)

So in the 1950s and the 1960s and so on, even though people weren’t being taught properly to read (if the tecahers stuck to the system) there were enough people who didn’t stick to the system or limit themselves to the system so that ALL children learned TO READ.

But when you lose that last one or two good teachers, then the whole thing is lost.

It’a absurd to believe that it is difficult to teach Juan and Deshawndre to read. And this happens if it is done right at an age before there is much trouble.

“Colin Powell (born 1937) went to public schools in the Bronx.”

Remind me not to tell you my opinion of Colin Powell. But more importantly…. okay, one. Keep going.

Well you could say his family came from the West Indies.

Which is a very good ethnic group to come from in the United states, but not so good in the United Kingdom.

The same ethnic group. How do you explain that?

“they got worse also in the black neighborhoods compared with what they were in the 1930s or even the 1950s”

Yes, but this is not an indictment of large-scale public operations per se, it is a vindication of the predictions that D.P. Moynihan made before the Great Society was implemented. They laughed at him and called him a racist.

Moynihan was saying family breakdown was important.

Now I think he said it broke down because of welfare. I think this is wrong. It broke down because of the prevalence of people who committed street crime. The crime came first. Then the family breakdown.

Of course then the argument would be didn’t the Irish also commit crimes in an earlier generation?

Well, you se ethe Irish had their religion, and it’s also breaking down because of premarital sex.

Lack of regulation put us in a depression. We removed the regulation in the late 90’s with Clinton’s triangulations, and guess what? It was déjà-vu all over again. I’d rather have some regulation than a depression via greedy Ponzi schemes.

Then I think he should be more specific rather than making it sound like it’s some sort of dastardly disease. Alter all, isn’t every regulation “antithetical to capitalism, and thus, to freedom?” BTW, this web site sure is flaky.

Good Allah. Is it so difficult to have a good faithed difference of opinion? By your standards, if only there were 2847463628464638283 more regulations on mortgages and investments, unicorns would poop Skittles.

I knew who it was, I was kidding of course. My apologies for not having a photographic memory. Though if you distill Jane Jacobs, she’s saying much the same thing, which was the point of my tiny leetle joke.

And now, adieu. Gotta go. You’ve generally been a good sport, which I respect, unlike most of the others here, who’ve frankly been quite tiresome. I’m afraid I grow weary of the rather lopsided invective-to-minor-points ratio. Oh well. If you ladies and gents are happy in your world, then I suppose that’s all that matters.

If it’s any consolation, a lot of you would have made great Zero pilots.

it sounds to me like Patterico was making an unqualified statement that all regulation is bad

No, that’s not what he was saying. His point was that regulation doesn’t drive efficiency in a market. He did not say that all regulation is bad, it is only your incorrect inference that led you to believe he did.

Lack of regulation put us in a depression. We removed the regulation in the late 90′s with Clinton’s triangulations, and guess what? It was déjà-vu all over again. I’d rather have some regulation than a depression via greedy Ponzi schemes.

Comment by Tillman (51d7aa) — 12/3/2012 @ 11:55 am
Horse manure pure and simple. There was no regulation removed during the Clinton administration. Glass-Steagall was repealed in the Gramm-Leach-Bliley act … but GLB added tons of regulation to the financial services industry at the same time as removing the prohibition on insurance companies providing financial services, and consumer and investment banking. Which had nothing to do with the financial sector crisis. Zipola.

This long repeated pile of horse manure is a Democrat hobby horse – regardless that its repeal was the mission of Clinton’s Treasury Secretary (the mentor of Obama’s Treasury secretary …).

And don’t forget the CRA revisions, the HUD rules promulgated by Cisneros, Cuomo, and to fair Alphonso Jackson, Reno’s DOJ pressure to lend
with regard to income, all based on the bogus 1992
Boston Fed report